The document discusses the Indian government's decision to deregulate petrol prices and increase prices for other petroleum products like diesel, kerosene, and LPG. Specifically:
- The government freed petrol prices from controls and immediately increased petrol prices by Rs3.7/liter. Diesel prices rose by Rs2/liter and will be deregulated gradually.
- Domestic LPG prices increased by Rs35/cylinder and kerosene by Rs3/liter, but these fuels will remain subsidized.
- The deregulation of petrol was expected, but the increases to diesel, LPG, and kerosene prices surprised analysts positively. However, the lack of a timeline for diesel deregulation
Apm gas price de regulation - event update - 20-05-10Angel Broking
- The Government of India has approved doubling the price of APM gas sold by ONGC and OIL from Rs3.20/scm to Rs6.82/scm, aligning it with KG-D6 gas prices.
- ONGC is expected to gain Rs5,039cr in revenue and Rs3,351cr in profits for FY2012, increasing EPS by Rs15.7. OIL India is expected to gain Rs941cr in revenue and Rs622cr in profits, increasing EPS by Rs25.9.
- GAIL will benefit from marketing margins of Rs200/scm on APM gas, gaining Rs344cr in revenue and Rs239cr in profits, increasing EPS by Rs
Natural State Research seeks $3 million investment for its technology that converts plastic waste into fuel. It has spent $7 million developing this process. The technology can produce fuel from almost all types of plastic at a lower cost than crude oil. It aims to license this technology to waste management companies and fuel users. Projections estimate the $3 million investment would be worth $17 million by 2013 and $80 million for the 10% stake by 2023 as the technology is adopted globally reducing plastic waste and dependence on imported oil.
The Petroleum and Natural Gas Regulatory Board (PNGRB) has announced provisional tariffs for GAIL India's key pipelines that are higher than previous estimates. For GAIL's older HBJ-GREP-DVPL pipeline, the tariff has been set at Rs. 25.46/mmbtu, a 10.6% decline from the current rate but still higher than estimates. For the DVPL/GREP expansion, the tariff has been set significantly higher at Rs. 53.65/mmbtu, an 88.4% increase over current rates. As a result, the analyst has revised earnings estimates upward and upgraded their recommendation on GAIL India stock to "Buy" with
1) The document is the presentation for the Lehman Brothers Energy & Power Conference by Robert W. Best, Chairman, President, and CEO of Atmos Energy Corporation on September 6, 2007.
2) Atmos Energy Corporation is a natural gas distribution company operating in 12 states as well as complementary nonutility businesses in 22 states.
3) Atmos has pursued a strategy of growth through acquisitions, successfully integrating over 20 acquisitions, and now serves over 3 million customers, making it the largest pure-gas distribution company in the US.
Gujarat Gas reported a 2.1% quarter-on-quarter increase in net operating income to Rs419 crore for 2QCY2010, with net profit increasing 21.5% year-over-year to Rs58 crore. EBITDA margin declined 270 basis points sequentially to 22.3% due to a decrease in the gross gas spread. Average gas sales volumes grew 2.1% quarter-on-quarter and 19.3% year-over-year. While top-line growth met expectations, bottom-line was marginally below estimates due to lower-than-expected EBITDA. Supply constraints are receding with improving domestic gas availability and subdued RLNG prices, supporting future volume
public serviceenterprise group 10/08/04-1-33finance20
The document provides an agenda and materials for a strategic presentation by PSEG to the financial community on October 8, 2004. The agenda covers PSEG's strategic overview, its subsidiaries PSE&G, PSEG Power, PSEG Energy Holdings, and financial review. Key points include PSEG's 2004 guidance of $750-800 million in earnings and 13-14% ROE. It also discusses competitive pressures from higher fuel prices and lower BGS auction margins, as well as PSE&G and PSEG Power's strategic focus on safety, reliability and low costs.
Chevron Corporation reported its earnings for the second quarter of 2008. Total net income was $5.975 billion, or $2.90 per diluted share, up from $5.380 billion in the second quarter of 2007. Upstream international operations contributed $5.057 billion in net income. Downstream operations in the U.S. reported a net loss of $682 million, while downstream international operations reported a net loss of $52 million.
Apm gas price de regulation - event update - 20-05-10Angel Broking
- The Government of India has approved doubling the price of APM gas sold by ONGC and OIL from Rs3.20/scm to Rs6.82/scm, aligning it with KG-D6 gas prices.
- ONGC is expected to gain Rs5,039cr in revenue and Rs3,351cr in profits for FY2012, increasing EPS by Rs15.7. OIL India is expected to gain Rs941cr in revenue and Rs622cr in profits, increasing EPS by Rs25.9.
- GAIL will benefit from marketing margins of Rs200/scm on APM gas, gaining Rs344cr in revenue and Rs239cr in profits, increasing EPS by Rs
Natural State Research seeks $3 million investment for its technology that converts plastic waste into fuel. It has spent $7 million developing this process. The technology can produce fuel from almost all types of plastic at a lower cost than crude oil. It aims to license this technology to waste management companies and fuel users. Projections estimate the $3 million investment would be worth $17 million by 2013 and $80 million for the 10% stake by 2023 as the technology is adopted globally reducing plastic waste and dependence on imported oil.
The Petroleum and Natural Gas Regulatory Board (PNGRB) has announced provisional tariffs for GAIL India's key pipelines that are higher than previous estimates. For GAIL's older HBJ-GREP-DVPL pipeline, the tariff has been set at Rs. 25.46/mmbtu, a 10.6% decline from the current rate but still higher than estimates. For the DVPL/GREP expansion, the tariff has been set significantly higher at Rs. 53.65/mmbtu, an 88.4% increase over current rates. As a result, the analyst has revised earnings estimates upward and upgraded their recommendation on GAIL India stock to "Buy" with
1) The document is the presentation for the Lehman Brothers Energy & Power Conference by Robert W. Best, Chairman, President, and CEO of Atmos Energy Corporation on September 6, 2007.
2) Atmos Energy Corporation is a natural gas distribution company operating in 12 states as well as complementary nonutility businesses in 22 states.
3) Atmos has pursued a strategy of growth through acquisitions, successfully integrating over 20 acquisitions, and now serves over 3 million customers, making it the largest pure-gas distribution company in the US.
Gujarat Gas reported a 2.1% quarter-on-quarter increase in net operating income to Rs419 crore for 2QCY2010, with net profit increasing 21.5% year-over-year to Rs58 crore. EBITDA margin declined 270 basis points sequentially to 22.3% due to a decrease in the gross gas spread. Average gas sales volumes grew 2.1% quarter-on-quarter and 19.3% year-over-year. While top-line growth met expectations, bottom-line was marginally below estimates due to lower-than-expected EBITDA. Supply constraints are receding with improving domestic gas availability and subdued RLNG prices, supporting future volume
public serviceenterprise group 10/08/04-1-33finance20
The document provides an agenda and materials for a strategic presentation by PSEG to the financial community on October 8, 2004. The agenda covers PSEG's strategic overview, its subsidiaries PSE&G, PSEG Power, PSEG Energy Holdings, and financial review. Key points include PSEG's 2004 guidance of $750-800 million in earnings and 13-14% ROE. It also discusses competitive pressures from higher fuel prices and lower BGS auction margins, as well as PSE&G and PSEG Power's strategic focus on safety, reliability and low costs.
Chevron Corporation reported its earnings for the second quarter of 2008. Total net income was $5.975 billion, or $2.90 per diluted share, up from $5.380 billion in the second quarter of 2007. Upstream international operations contributed $5.057 billion in net income. Downstream operations in the U.S. reported a net loss of $682 million, while downstream international operations reported a net loss of $52 million.
Syntek Engine Boost 2.0 is a fuel additive that has been tested for nearly two decades. It is now available to the public to use in cars, trucks, boats, and other vehicles. It works by improving combustion, which can increase gas mileage by up to 20%, prolong engine life, reduce emissions, and save money on fuel and maintenance costs. Customers report seeing significant increases in miles per gallon within their first use.
AEP's dividend policy and expected EPS growth rate are detailed in this handout, which was shared at the Greater Chicagoland Coalition of Better Investing.
This presentation reflects conditions at the time it was delivered and do not include later developments. Updated information about current conditions can be found in the companies' filings with the Securities and Exchange Commission. AEP has not undertaken an obligation to update the presentation on this page.
Atmos Energy Corporation provides forward-looking statements about its business in this presentation. It operates natural gas utilities in 12 states and nonutility businesses in 22 states. The company has grown through acquisitions, becoming the largest pure-play natural gas distribution company based on customers. It aims to maximize core utility earnings through regulatory strategies including weather normalization adjustment mechanisms, gas cost recovery, and capital investment recovery riders. Nonutility operations in gas marketing and pipeline/storage complement the utility business.
1) Cross Timbers Oil Company reported strong financial and operational results in 1999, including record production, increased proved reserves, and higher cash flow.
2) The company acquired nearly 500 billion cubic feet equivalent of reserves in the Arkoma Basin, establishing a new core area.
3) Cross Timbers also conducted property sales totaling $258 million, using proceeds to reduce debt and fund acquisitions like the Arkoma Basin properties.
4) The company executed its most aggressive development program in history in 1999, adding over 800 billion cubic feet equivalent of reserves at a cost of $0.70 per thousand cubic feet equivalent.
NiSource Inc. is an energy holding company that provides natural gas, electricity, and other energy products and services to approximately 3.7 million customers located along the Gulf Coast through the Midwest to New England. The company operates through four primary business segments: Gas Distribution Operations, Gas Transmission and Storage Operations, Electric Operations, and Other Operations. Gas Distribution Operations serves over 3.3 million customers in 9 states through 56,000 miles of pipeline. Gas Transmission and Storage Operations owns and operates approximately 16,000 miles of interstate pipelines and one of the largest underground natural gas storage systems in the US. Electric Operations generates and distributes electricity to approximately 446,000 customers in northern Indiana. Other Operations participates in energy-
Dynegy's Midwest portfolio is well-positioned with over 5,500 MW of baseload coal and efficient natural gas-fired plants. Coal plants generally set the marginal price of power over 80% of the time in the Midwest ISO market due to low natural gas prices and reduced demand. Dynegy's Midwest facilities benefit from low-cost Powder River Basin coal and rail contracts.
GSPL reported a 1QFY2011 total operating income of Rs. 252 cr, a 19.4% increase over 1QFY2010 but slightly below expectations. EBITDA grew 20.3% to Rs. 238 cr but was also below estimates. Profits were higher year-over-year with PAT of Rs. 105 cr, up 30.6% from Rs. 80 cr in 1QFY2010, however profits were lower than expected. Transmission volumes increased 43.4% year-over-year but average transmission tariffs decreased 16.7% year-over-year, contributing to revenue being lower than estimated. Despite missing estimates, the analyst maintains an accumulate rating on GSPL due to growth potential
This document summarizes an investor presentation by Xcel Energy on its business operations and financial outlook. It discusses Xcel Energy's integrated utility operations, positive cash flow generation, plans to divest its stake in NRG Energy through bankruptcy proceedings, financial guidance for 2003 including earnings per share, and capital expenditure plans. The presentation also provides comparisons of Xcel Energy's operating metrics to industry peers.
Progress Energy reported 2004 ongoing earnings of $3.06 per share and GAAP earnings of $3.13 per share. For the fourth quarter, ongoing earnings were $0.62 per share and GAAP earnings were $0.80 per share. For 2005, ongoing earnings guidance was set at $2.90 to $3.20 per share. Key drivers for 2005 earnings included customer growth and usage offset by higher O&M costs and the sale of Progress Rail. Significant events in 2004 included hurricane impacts, regulatory filings, and asset sales.
This document provides an overview of Xcel Energy Inc. for investors attending the EEI International Financial Conference. It summarizes Xcel's business segments, strengths, investment merits, capital investment plans, power supply, environmental commitments, and financial performance. Projections for 2004 earnings per share and cash flow are also presented. Key points include Xcel being the 4th largest US electric and gas utility, a growing service area, low rates, and a goal of providing competitive total returns of 7-9% to shareholders.
The 2004 Burlington Resources annual report discusses the company's strong financial and operational performance in 2004 and outlook for 2005. Some key points:
- Burlington reported record financial results in 2004, including $1.527 billion in net income and a 12% increase in production to 2,817 MMCFE/day.
- The company replaced 125% of its 2004 production at a low finding cost of $1.27/MCFE and increased total reserves to 12.0 TCFE.
- Burlington expects to continue growing production 3-8% annually in 2005 through investment in its core asset base focused on North America.
- Challenges include continually upgrading the drilling inventory
Apresentação 1a conferência anual citi brasil (em inglês)Braskem_RI
This presentation provides an overview of Braskem, the largest petrochemical company in Latin America. It discusses Braskem's key differentiators including its large scale of operations, regional strength in South America, and history of strong and consistent growth through organic and acquisition routes. The presentation reviews Braskem's financial and operational figures, leadership positions in key Brazilian markets, and differentiated technology including being a global pioneer in green polymers. It also notes Braskem's consistent spreads over international prices for its resin products.
The document summarizes statistics on global and domestic tobacco markets. Key points include:
- China accounts for 42% of the world's cigarette consumption and its market is growing steadily.
- U.S. cigarette consumption and sales have declined significantly in recent years due to tax increases and other policies.
- Cigarette prices in the U.S. have risen steadily from 2002 to present.
- Non-cigarette tobacco products like cigars, smokeless tobacco and RYO have increased in sales in the U.S.
- Forecasts predict continued declines in U.S. cigarette consumption in the coming years.
The document discusses changes in consumer driving and spending behaviors due to high gasoline prices in 2008. It finds that consumers spent $108 billion more on gasoline in 2008 despite driving 1.5 billion fewer gallons of gas. Surveys showed that to save money 59.5% of consumers drove less, 48.6% reduced shopping trips, and 11.4% carpooled. Many consumers also changed vacation plans or moved closer to work and shopping to drive shorter distances as gasoline prices exceeded $3 per gallon.
ARC Resources - November 2012 Investor PresentationARC Resources
This document provides an overview of ARC Resources, an energy company, including:
1) ARC produced over 92,000 barrels of oil equivalent per day in 2012, consisting of 36,000 barrels per day of liquids and 341 million cubic feet per day of natural gas.
2) ARC has over 572 million barrels of oil equivalent of reserves with an estimated reserve life of 17 years based on 2012 production levels.
3) ARC has focused on growing its oil and liquids production, which comprised 40% of third quarter 2012 production and contributed 78% of revenue over that period.
This document provides an overview and 2Q results presentation by Petrobras CFO Almir Barbassa. Some key points:
- Petrobras' investment plan from 2007-2011 totals $87.1 billion, with 56% going to E&P to focus on growth in light oil and natural gas production and reserves.
- Financial targets include average return on capital employed of 16% from 2007-2011 and maintaining net debt to equity ratio below 25%.
- Major production growth projects through 2011 include the P-50, P-34 and other platforms that will contribute an additional 560,000 bpd of capacity in 2007 alone.
- From 2011-2015, 15 large projects are planned to
8º Foro Latibex - Strategic Plan and 3rd Quarter ResultsPetrobras
This document contains a presentation by Petrobras executives discussing the company's strategic plan and 3rd quarter results for 2006. The presentation outlines Petrobras' key drivers and business strategies, including expanding natural gas and downstream operations. It provides macroeconomic assumptions for 2007-2011 and details Petrobras' $87 billion investment plan over that period focused on exploration and production, downstream activities, and international expansion. Production targets, main projects, and financial targets are also summarized.
Oil & Gas sector in 4QFY15: Higher GRM and auto fuel margins to benefit OMCsIndiaNotes.com
The document summarizes key points about the oil and gas sector performance in the fourth quarter of fiscal year 2015. It notes that diesel and petrol marketing margins trended higher due to deregulation. Refiners are expected to report high profits due to increased gasoline refining margins and stable crude prices. For oil PSUs, profitability will depend on subsidy sharing, which remains unclear. Reliance Industries' profit is forecast to rise 6% due to higher gasoline refining margins.
The document provides an oil market update from Nomura analysts. It summarizes estimates from the International Energy Agency (IEA) and OPEC for oil demand and supply growth in 2010 and 2011. The IEA lowered its estimates for non-OPEC supply growth while raising demand estimates. OPEC also raised demand estimates for 2010 while keeping other estimates unchanged. Crude oil inventories in the US fell sharply last week. The Commodity Futures Trading Commission proposed exemptions to central clearing requirements for some derivatives. OPEC left its oil production quotas unchanged.
How co-product credits will preserve naphtha’s viability as an olefin feedsto...emeamarketing
Read the How co-product credits will preserve naphtha’s viability as an olefin feedstock presentation given at EPCA 2012 by Platts editor Jim Foster. This presentation talks about ethane’s growing popularity; propylene feeling the pinch; naphtha’s positive co-product scenario and ethane rejection and the impact on naphtha.
The document discusses why the full benefits of reduced global crude oil prices have not been passed on to consumers in India. It notes that while crude oil prices have fallen significantly, petrol and diesel prices have only fallen by 10-15 rupees. This is because the government has used the opportunity to increase excise duties on petrol and diesel four times, capturing the savings for itself. The increased excise duties have allowed the government to generate additional revenue to reduce the fiscal deficit and improve India's financial situation. Exchange rate fluctuations have also contributed to Indian oil companies and consumers not gaining the full benefits of lower international crude prices.
Syntek Engine Boost 2.0 is a fuel additive that has been tested for nearly two decades. It is now available to the public to use in cars, trucks, boats, and other vehicles. It works by improving combustion, which can increase gas mileage by up to 20%, prolong engine life, reduce emissions, and save money on fuel and maintenance costs. Customers report seeing significant increases in miles per gallon within their first use.
AEP's dividend policy and expected EPS growth rate are detailed in this handout, which was shared at the Greater Chicagoland Coalition of Better Investing.
This presentation reflects conditions at the time it was delivered and do not include later developments. Updated information about current conditions can be found in the companies' filings with the Securities and Exchange Commission. AEP has not undertaken an obligation to update the presentation on this page.
Atmos Energy Corporation provides forward-looking statements about its business in this presentation. It operates natural gas utilities in 12 states and nonutility businesses in 22 states. The company has grown through acquisitions, becoming the largest pure-play natural gas distribution company based on customers. It aims to maximize core utility earnings through regulatory strategies including weather normalization adjustment mechanisms, gas cost recovery, and capital investment recovery riders. Nonutility operations in gas marketing and pipeline/storage complement the utility business.
1) Cross Timbers Oil Company reported strong financial and operational results in 1999, including record production, increased proved reserves, and higher cash flow.
2) The company acquired nearly 500 billion cubic feet equivalent of reserves in the Arkoma Basin, establishing a new core area.
3) Cross Timbers also conducted property sales totaling $258 million, using proceeds to reduce debt and fund acquisitions like the Arkoma Basin properties.
4) The company executed its most aggressive development program in history in 1999, adding over 800 billion cubic feet equivalent of reserves at a cost of $0.70 per thousand cubic feet equivalent.
NiSource Inc. is an energy holding company that provides natural gas, electricity, and other energy products and services to approximately 3.7 million customers located along the Gulf Coast through the Midwest to New England. The company operates through four primary business segments: Gas Distribution Operations, Gas Transmission and Storage Operations, Electric Operations, and Other Operations. Gas Distribution Operations serves over 3.3 million customers in 9 states through 56,000 miles of pipeline. Gas Transmission and Storage Operations owns and operates approximately 16,000 miles of interstate pipelines and one of the largest underground natural gas storage systems in the US. Electric Operations generates and distributes electricity to approximately 446,000 customers in northern Indiana. Other Operations participates in energy-
Dynegy's Midwest portfolio is well-positioned with over 5,500 MW of baseload coal and efficient natural gas-fired plants. Coal plants generally set the marginal price of power over 80% of the time in the Midwest ISO market due to low natural gas prices and reduced demand. Dynegy's Midwest facilities benefit from low-cost Powder River Basin coal and rail contracts.
GSPL reported a 1QFY2011 total operating income of Rs. 252 cr, a 19.4% increase over 1QFY2010 but slightly below expectations. EBITDA grew 20.3% to Rs. 238 cr but was also below estimates. Profits were higher year-over-year with PAT of Rs. 105 cr, up 30.6% from Rs. 80 cr in 1QFY2010, however profits were lower than expected. Transmission volumes increased 43.4% year-over-year but average transmission tariffs decreased 16.7% year-over-year, contributing to revenue being lower than estimated. Despite missing estimates, the analyst maintains an accumulate rating on GSPL due to growth potential
This document summarizes an investor presentation by Xcel Energy on its business operations and financial outlook. It discusses Xcel Energy's integrated utility operations, positive cash flow generation, plans to divest its stake in NRG Energy through bankruptcy proceedings, financial guidance for 2003 including earnings per share, and capital expenditure plans. The presentation also provides comparisons of Xcel Energy's operating metrics to industry peers.
Progress Energy reported 2004 ongoing earnings of $3.06 per share and GAAP earnings of $3.13 per share. For the fourth quarter, ongoing earnings were $0.62 per share and GAAP earnings were $0.80 per share. For 2005, ongoing earnings guidance was set at $2.90 to $3.20 per share. Key drivers for 2005 earnings included customer growth and usage offset by higher O&M costs and the sale of Progress Rail. Significant events in 2004 included hurricane impacts, regulatory filings, and asset sales.
This document provides an overview of Xcel Energy Inc. for investors attending the EEI International Financial Conference. It summarizes Xcel's business segments, strengths, investment merits, capital investment plans, power supply, environmental commitments, and financial performance. Projections for 2004 earnings per share and cash flow are also presented. Key points include Xcel being the 4th largest US electric and gas utility, a growing service area, low rates, and a goal of providing competitive total returns of 7-9% to shareholders.
The 2004 Burlington Resources annual report discusses the company's strong financial and operational performance in 2004 and outlook for 2005. Some key points:
- Burlington reported record financial results in 2004, including $1.527 billion in net income and a 12% increase in production to 2,817 MMCFE/day.
- The company replaced 125% of its 2004 production at a low finding cost of $1.27/MCFE and increased total reserves to 12.0 TCFE.
- Burlington expects to continue growing production 3-8% annually in 2005 through investment in its core asset base focused on North America.
- Challenges include continually upgrading the drilling inventory
Apresentação 1a conferência anual citi brasil (em inglês)Braskem_RI
This presentation provides an overview of Braskem, the largest petrochemical company in Latin America. It discusses Braskem's key differentiators including its large scale of operations, regional strength in South America, and history of strong and consistent growth through organic and acquisition routes. The presentation reviews Braskem's financial and operational figures, leadership positions in key Brazilian markets, and differentiated technology including being a global pioneer in green polymers. It also notes Braskem's consistent spreads over international prices for its resin products.
The document summarizes statistics on global and domestic tobacco markets. Key points include:
- China accounts for 42% of the world's cigarette consumption and its market is growing steadily.
- U.S. cigarette consumption and sales have declined significantly in recent years due to tax increases and other policies.
- Cigarette prices in the U.S. have risen steadily from 2002 to present.
- Non-cigarette tobacco products like cigars, smokeless tobacco and RYO have increased in sales in the U.S.
- Forecasts predict continued declines in U.S. cigarette consumption in the coming years.
The document discusses changes in consumer driving and spending behaviors due to high gasoline prices in 2008. It finds that consumers spent $108 billion more on gasoline in 2008 despite driving 1.5 billion fewer gallons of gas. Surveys showed that to save money 59.5% of consumers drove less, 48.6% reduced shopping trips, and 11.4% carpooled. Many consumers also changed vacation plans or moved closer to work and shopping to drive shorter distances as gasoline prices exceeded $3 per gallon.
ARC Resources - November 2012 Investor PresentationARC Resources
This document provides an overview of ARC Resources, an energy company, including:
1) ARC produced over 92,000 barrels of oil equivalent per day in 2012, consisting of 36,000 barrels per day of liquids and 341 million cubic feet per day of natural gas.
2) ARC has over 572 million barrels of oil equivalent of reserves with an estimated reserve life of 17 years based on 2012 production levels.
3) ARC has focused on growing its oil and liquids production, which comprised 40% of third quarter 2012 production and contributed 78% of revenue over that period.
This document provides an overview and 2Q results presentation by Petrobras CFO Almir Barbassa. Some key points:
- Petrobras' investment plan from 2007-2011 totals $87.1 billion, with 56% going to E&P to focus on growth in light oil and natural gas production and reserves.
- Financial targets include average return on capital employed of 16% from 2007-2011 and maintaining net debt to equity ratio below 25%.
- Major production growth projects through 2011 include the P-50, P-34 and other platforms that will contribute an additional 560,000 bpd of capacity in 2007 alone.
- From 2011-2015, 15 large projects are planned to
8º Foro Latibex - Strategic Plan and 3rd Quarter ResultsPetrobras
This document contains a presentation by Petrobras executives discussing the company's strategic plan and 3rd quarter results for 2006. The presentation outlines Petrobras' key drivers and business strategies, including expanding natural gas and downstream operations. It provides macroeconomic assumptions for 2007-2011 and details Petrobras' $87 billion investment plan over that period focused on exploration and production, downstream activities, and international expansion. Production targets, main projects, and financial targets are also summarized.
Oil & Gas sector in 4QFY15: Higher GRM and auto fuel margins to benefit OMCsIndiaNotes.com
The document summarizes key points about the oil and gas sector performance in the fourth quarter of fiscal year 2015. It notes that diesel and petrol marketing margins trended higher due to deregulation. Refiners are expected to report high profits due to increased gasoline refining margins and stable crude prices. For oil PSUs, profitability will depend on subsidy sharing, which remains unclear. Reliance Industries' profit is forecast to rise 6% due to higher gasoline refining margins.
The document provides an oil market update from Nomura analysts. It summarizes estimates from the International Energy Agency (IEA) and OPEC for oil demand and supply growth in 2010 and 2011. The IEA lowered its estimates for non-OPEC supply growth while raising demand estimates. OPEC also raised demand estimates for 2010 while keeping other estimates unchanged. Crude oil inventories in the US fell sharply last week. The Commodity Futures Trading Commission proposed exemptions to central clearing requirements for some derivatives. OPEC left its oil production quotas unchanged.
How co-product credits will preserve naphtha’s viability as an olefin feedsto...emeamarketing
Read the How co-product credits will preserve naphtha’s viability as an olefin feedstock presentation given at EPCA 2012 by Platts editor Jim Foster. This presentation talks about ethane’s growing popularity; propylene feeling the pinch; naphtha’s positive co-product scenario and ethane rejection and the impact on naphtha.
The document discusses why the full benefits of reduced global crude oil prices have not been passed on to consumers in India. It notes that while crude oil prices have fallen significantly, petrol and diesel prices have only fallen by 10-15 rupees. This is because the government has used the opportunity to increase excise duties on petrol and diesel four times, capturing the savings for itself. The increased excise duties have allowed the government to generate additional revenue to reduce the fiscal deficit and improve India's financial situation. Exchange rate fluctuations have also contributed to Indian oil companies and consumers not gaining the full benefits of lower international crude prices.
Why the benefit of reduction in Crude oil prices has not been transferred to public? What are dynamics behind not reducing the Petrol and Diesel price significantly?
1) Gas pricing reform trials have begun in Guangdong and Guangxi provinces, shifting from a cost-plus pricing model to a netback formula linked to alternative fuel prices.
2) This partially addresses a key impediment to nationwide reform by establishing benchmarks regardless of gas source, but the regulator still faces challenges in setting provincial prices.
3) Under the new system, state-owned PetroChina would see lower but still ongoing losses on imported gas pipelines, while import costs also remain above the new benchmarks.
IRJET- Performance Analysis of Jatropha Based-Base Catalysed Biofuels on a Di...IRJET Journal
This document summarizes a study that analyzed the performance of biodiesel fuels produced from Jatropha seeds using different catalysts in a diesel engine. Jatropha oil was converted to ethyl and methyl esters using base-catalyzed transesterification with KOH and NaOH catalysts. The biodiesel fuels were blended with diesel fuel in a 25% biodiesel, 75% diesel ratio. Testing of the blended fuels found that Jatropha ethyl ester produced with KOH had better properties and engine performance than the other fuels. Properties like viscosity, calorific value, cloud point, and flash point of the blended fuels met biodiesel standards. The blended fuels were then tested in
The document summarizes lessons learned from the 2006 biofuels boom and bust. It notes that in 2006, many biodiesel and ethanol plants were built due to high subsidies and margins. However, by 2007-2009, subsidies expired, commodity prices increased significantly, and many plants became unprofitable or idled. Key lessons included overreliance on perpetual subsidies, failure to properly assess risks like commodity price volatility, and lack of understanding of business fundamentals. Proper due diligence for new biomass projects must thoroughly quantify all risks, not assume long-term subsidies, understand industry details, and pursue strategies to disconnect from volatile commodity feedstock markets.
1) IGL reported a 43.5% year-over-year increase in operating income to Rs336cr for 1QFY2011, above expectations, driven by strong growth in CNG and PNG volumes.
2) Operating margins contracted 487bps year-over-year to 32% due to higher gas costs.
3) Net profit grew 18.4% year-over-year to Rs57.1cr, slightly below expectations, as higher revenues were offset by increased raw material costs.
- U.S. petroleum refining company presenting at an energy conference
- Facing challenges from weak refining market conditions and falling gasoline demand
- Taking steps to improve operating flexibility and maximize contributions from non-refining businesses like logistics and coke to maintain financial performance
Indraprastha Gas Ltd.- Company Update-June 22, 2010Angel Broking
The document discusses Indraprastha Gas (IGL), an Indian city gas distribution company. It makes the following key points:
1) IGL recently increased CNG prices by Rs.5.6/kg, more than offsetting expected margin declines from higher gas costs. This reduces risks to IGL's margins.
2) With gas prices frozen until 2014, IGL may not need major price hikes, further reducing margin risks.
3) Strong volume growth from new CNG vehicles and domestic PNG connections will drive earnings growth of 17.5% annually for IGL over 2010-2012.
4) Lower risks and higher earnings lead the analyst to increase their target price for
Indraprastha Gas Ltd.- Company Update-June 22, 2010Angel Broking
The document discusses an update on Indraprastha Gas (IGL). Key points include:
1) IGL recently increased CNG prices in Delhi by Rs.5.6/kg, more than offsetting expected margin declines from higher gas costs.
2) This eliminates concerns around IGL's ability to pass on higher costs without regulatory issues.
3) Strong volume growth from new CNG vehicles and domestic PNG, coupled with stable margins, is expected to drive 17.5% profit growth for IGL over the next few years.
4) The analyst upgrades IGL to "Buy" with a revised target price of Rs. 301 due to lower risks and higher earnings estimates.
The document provides an overview and analysis of the oil and gas sector in Asia. It discusses potential price cuts for refined products in China in June due to falling oil prices. It also notes challenges for integrated oil companies and refiners in the second quarter from higher crude prices and weaker margins. The document suggests natural gas reform in China will be gradual and offshore oil costs in the region remain high. It maintains an overweight rating on the sector.
Renewable Chemicals and Advanced Biofuelsdinomasch
This document provides an overview of Gevo, Inc., a company that produces renewable chemicals and biofuels using proprietary technology. Key points:
- Gevo has developed a patented process called GIFT that uses yeast fermentation to convert plant-based sugars into isobutanol, which can then be used to produce chemicals, fuels and other products as a drop-in replacement for petroleum.
- Isobutanol production is cost competitive with petroleum-based production due to high yields from GIFT and the increasing price differential between oil and plant-based feedstocks.
- Gevo has two commercial production facilities, one wholly owned and one in a joint venture, and is focused on multiple end
1) ONGC reported lower than expected results for the first quarter of fiscal year 2011 due to lower crude oil and natural gas production as well as a decline in net realizations.
2) Total operating income declined 8.7% year-over-year to Rs. 13,823 crore, while net profit declined 24.5% to Rs. 3,661 crore.
3) While performance is expected to improve going forward due to fuel price reforms, the analyst maintains an "Accumulate" rating on ONGC shares due to limited downside risk and potential for further reforms in the oil sector.
Similar to Oil Price Deregulation - Event Update (20)
The Indian markets are expected to open higher, tracking gains in most Asian markets. Spain has asked for a bailout of up to €100 billion for its banking system. Chinese exports grew more than expected in May. In India, shares extended gains for a fifth session despite weak global cues as major central banks held off on additional stimulus. The key support and resistance levels for the Nifty are 5,023 and 5,114 respectively. L&T has bagged orders worth Rs. 483 crore to build commercial vessels in Qatar. Vedanta Resources has acquired a 24.5% stake in Raykal Aluminium for Rs. 201 crore.
Axis Bank reported a 27.0% year-over-year increase in net profit to Rs. 942 crore for the first quarter of fiscal year 2012, in line with analyst estimates. Business growth momentum slowed as advances declined 7.4% quarter-over-quarter and deposits fell 3.0% quarter-over-quarter, moderating the bank's cash-deposit ratio to 40.5% from 41.1% last quarter. However, asset quality remained healthy with slippage ratio declining to 0.8% and gross and net NPA ratios stable.
1) For 1QFY2012, Electrosteel Castings reported 16.4% sales growth but margins declined due to higher raw material costs. EBITDA fell 18.2% and net profit declined 7.2%.
2) While sales volumes grew, costs increased more due to a rise in raw material costs as a percentage of sales.
3) The company maintains a buy recommendation due to initiatives in steelmaking and backward integration that should lower costs starting in FY2013 and valuation remains attractive.
1) For 1QFY2012, Persistent Systems reported revenues of ₹224 crore, up 5.2% over the previous quarter and 23.6% over the same period last year.
2) EBITDA was ₹40 crore, up 5.3% over the previous quarter but margins declined.
3) PAT was ₹28 crore, down 16.8% over the previous quarter due to higher taxes.
4) Management maintained revenue guidance of 29% growth for FY2012 and expects PAT to remain flat despite higher tax rates.
HT Media reported a 22.7% year-over-year increase in revenue to ₹494 crore for the first quarter of FY2012. Revenue was also up 5.8% quarter-over-quarter. Advertising revenue grew 17% year-over-year, with 18% growth in English and 15% growth in Hindi. Operating profit rose 11.8% year-over-year to ₹87.8 crore due to higher other income and lower tax rates, although operating margins contracted by 174 basis points. The company maintained its Accumulate rating based on expectations of continued revenue growth and margin expansion.
The summary is:
1) The derivative report analyzes the performance of the Nifty futures, options, and key stocks from the previous trading session on July 18, 2011.
2) It provides details on changes in open interest, premium levels, volatility, and turnover for various derivatives contracts.
3) Trading strategies and technical analysis is also given for some stocks along with risk-reward profiles of sample spreads trades for the Nifty.
The market ended lower, with the Sensex and Nifty closing down 0.3%. Mid- and small-cap indices closed higher. Select heavyweights like Hindalco Industries and BHEL gained 1-3%, while TCS and Tata Motors lost 1-2%. In corporate news, Motherson Sumi Systems agreed to acquire an 80% stake in Peguform for €141.5 million. HDFC Bank, Cadila Healthcare, Crompton Greaves, and Ashok Leyland are scheduled to announce their quarterly results. The trend for the day will be decided by whether Nifty trades above or below the levels of 18,533/5,572 in early trade.
- GSM subscriber additions in India continued their declining trend in June 2011, with net additions of 9.6 million, down 10% from the previous month.
- All major operators except BSNL reported a drop in subscriber additions. Bharti and Vodafone each added 2.1 million subscribers.
- The total GSM subscriber base reached 598.8 million in June 2011, with Bharti, Vodafone, Idea and BSNL maintaining their major market shares.
The document provides a technical analysis of the Indian stock market indices Sensex and Nifty for the week of July 16, 2011. It summarizes that the indices declined over 1.5% for the week and are currently trading in a range between 18,326/5496 on the downside and 19,132/5740 on the upside. It notes that a break above or below this range would dictate the direction of the upcoming trend. The analysis also lists pivot levels for 50 Nifty stocks to watch in the coming week.
The document provides a summary of derivative market activity in India for July 18, 2011. Key points include:
- Nifty futures open interest increased 0.67% while Mini Nifty increased 3.48% as the market closed at 5581.10
- Nifty July futures closed at a premium of 5.85 points and August futures at a premium of 22.60 points
- Implied volatility of at-the-money options decreased from 18% to 17.3%
- Total open interest in the market was Rs. 135,158 crore with stock futures open interest at Rs. 34,675 crore.
The indices opened flat but traded choppily throughout the day. Metal, auto and realty stocks declined while IT stocks gained. The indices are currently trading in a range between 18,326-18,810/5496-5653 on the downside and 19,132-19,094/5740-5700 on the upside. A break above these resistance levels could lead to further gains while a break below support could result in losses extending to 17,805-17,950/5350-5400. Pivot levels for 50 Nifty stocks are provided.
- The key Indian stock indices declined slightly, with the Sensex and Nifty closing down 0.3%.
- GSM subscriber additions in India continued their declining trend in June across most major operators such as Idea, Bharti Airtel, and Vodafone. Total GSM subscriber addition was 9.6 million, down 10% from the previous month.
- Tata Motors reported flat annual global sales growth in June 2011 compared to the previous year.
- South Indian Bank reported a 41.2% year-over-year increase in net profit to Rs. 82 crores for the first quarter of fiscal year 2012, slightly below analyst estimates.
- Business growth remained strong, with advances growth of 31.2% and deposits growth of 35.5% year-over-year. However, net interest margins compressed by 29 basis points sequentially to 2.8% due to a sharp rise in the bank's cost of deposits.
- Non-interest income was boosted by treasury gains, but fee income growth was modest. Asset quality was stable with gross and net NPAs rising marginally, and provision coverage at a comfortable 73.1%.
Bajaj Auto reported marginally lower-than-expected results for the first quarter of fiscal year 2012, with net sales growth of 22.8% year-over-year driven by a 17.7% increase in volumes. However, operating margins contracted by 145 basis points quarter-over-quarter to 19.1% due to a 150 basis point increase in raw material costs. As a result, net profit grew by 20.5% year-over-year to ₹711 crore, which was slightly below analyst estimates. Going forward, the analyst expects further margin pressure and has revised downward its earnings estimates for fiscal years 2012 and 2013 to factor in higher raw material costs and changes to export incentives.
1) Tata Consultancy Services (TCS) reported strong results for the first quarter of fiscal year 2012, outperforming expectations with revenue growth of 6.3% over the previous quarter and 31.4% over the same quarter of the previous fiscal year.
2) A key highlight was 7.4% quarter-over-quarter growth in business volumes. While profit margins declined due to wage hikes, net profit remained flat due to foreign exchange gains.
3) Management maintained a positive outlook, highlighting strong demand environment and deal pipeline, and expects pricing increases later in the fiscal year.
The document summarizes the Indian stock market outlook and performance on July 15, 2011. It reports that domestic indices closed with modest gains of 0.1-0.4%, while global indices declined. Wholesale price inflation in India rose to 9.44% in June 2011, above estimates and persisting above 9% for seven months, driven by increases in primary articles and fuel costs. Key benchmark levels are identified for determining if the market may continue rallying or correct in the near term.
The summary is:
1) The derivative report analyzes the movement in Nifty futures, options, and individual stocks between July 14-15, 2011.
2) Nifty futures open interest decreased while mini Nifty open interest increased as the market closed at 5599.80.
3) Implied volatility of at-the-money options increased from 17.6% to 18%.
The Sensex and Nifty indices opened lower and traded with volatility, closing marginally lower. On the sectoral front, Realty, Banks and Healthcare gained while IT and FMCG fell. The advance-decline ratio favored advancing stocks. On the daily chart, prices tested but did not close above the downward gap area of 18,679-18,589/5,601-5,580 levels. Immediate resistance is seen at 18,735/5,633, while 18,449/5,541 is crucial support.
1) Infosys reported modest revenue growth of 3.2% qoq for 1QFY2012. EBITDA and margins declined due to wage hikes.
2) Guidance for 2QFY2012 revenue growth was lower than expected at 3.5-5% qoq. Annual revenue growth guidance was unchanged.
3) The analyst revised EPS estimates down and cut the target price to INR 3,200 due to macro concerns and muted guidance.
This document summarizes a derivative report from India Research dated July 13, 2011. Some key points:
- The Nifty futures open interest increased 0.51% while Minifty futures open interest rose 8.2% as the market closed at 5526.15.
- Implied volatility of at-the-money options increased from 18% to 19.75%. PCR-OI decreased from 1.20 to 1.15.
- Total open interest of the market is Rs. 125,816 crore and stock futures open interest is Rs. 33,500 crore.
- FII were net sellers of Rs. 969 crore in the cash market segment. Put-call
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1. Event Update | Oil & Gas
June 28, 2010
Pareek
Deepak Pareek
Price
Oil Price Deregulation +91 22 4040 3800 Ext: 340
deepak.pareek@angeltrade.com
On the path of reforms
Vora
Amit Vora
In a meeting held on Friday, June 25, 2010, the Empowered Group of Ministers +91 22 4040 3800 Ext: 322
(EGoM) took a major policy decision on the country's retail fuel pricing. After long amit.vora@angeltrade.com
deliberation for more than a year, the EGoM has freed the price of petrol from the
government's control. On an immediate basis, petrol price has increased by
Rs3.7/litre. Diesel prices has been also increased by Rs2/litre and are to be
deregulated in a phased manner. However, no timeline for the decontrol has been
mentioned. In the cooking fuel segment, domestic LPG prices has been increased
by Rs35/cylinder, and kerosene price by Rs3/litre. However, cooking fuels will
continue to be subsidised.
While the announcement of petrol deregulation is in line with our expectation, the
announcement of the deregulation of diesel prices and increase in prices of kerosene
and domestic LPG has surprised us positively. However, absence of (1) the timeline
of the diesel price deregulation, (2) the frequency of change in petrol price and (3)
pricing limit (band) for petrol price takes some sheen off the decision.
We were also pinning hopes on the announcement of the subsidy-sharing formulae;
however, the absence of the same has left us a bit disappointed, as it makes it
difficult to judge the beneficiaries of the move.
All said, we believe the policy change is a significant step in the right direction and
has come as a positive surprise for PSU oil companies, viz. ONGC, OIL India,
GAIL, IOC, HPCL and BPCL. In case of upstream companies, we were already
building in the proposed moves and the same was reflected in higher-than-consensus
EPS estimates for ONGC and GAIL.
We believe downstream oil companies are likely to be key beneficiaries of the
deregulation on the following counts:
• Reduction in overall subsidies to manageable limits
• Subdued outlook on crude oil prices
• Improved profitability situation of upstream companies post the APM gas price
hike, enables them to bear a relatively higher subsidy burden
• Government efforts towards divestment in IOC
Thus, we believe, while the move is likely to benefit downstream oil marketing
companies, the same is likely to be neutal for upstream oil companies.
Valuation Summary
Companies CMP Target Reco Mkt Cap EPS P/E P/B EV/EBITDA (%)
EV/EBITDA
(Rs) Price (Rs cr) FY2011E FY2012E FY2011E FY2012E FY2011E FY2012E FY2011E FY2012E
ONGC 1,304 1,356 Neutral 278,973 114.6 123.3 11.4 10.6 2.4 2.1 4.7 4.3
GAIL 473 580 Buy 60,031 30.3 35.2 15.6 13.4 3.1 2.6 10.6 8.3
HPCL 433 - Not Rated 14,664 47.3 48.4 9.1 8.9 1.2 1.1 5.4 5.0
BPCL 642 - Not Rated 23,225 48.1 60.4 13.4 10.6 1.4 1.3 10.5 7.1
Source: Angel Research
Please refer to important disclosures at the end of this report
2. Oil Price Deregulation | Event Update
Broad counters of the move
On an immediate basis, petrol price has Petrol price deregulated; Diesel (to be deregulated) and cooking fuel prices also
gone up by Rs3.7/litre (~7%). Similarly, hiked: In the EGoM meeting held on June 25, 2010, the government has decided to
the government has increased diesel price increase the prices of all subsidised petro products. The government has also
by Rs2/litre (~5%). The price of domestic deregulated petrol prices. This will, in turn, permit oil marketing companies (OMCs)
LPG has been increased by Rs35/cylinder to fix the price of petrol on a market determined basis. On an immediate basis, petrol
(~11%), and kerosene price has price has gone up by Rs3.7/litre (~7%). Similarly, the government has increased diesel
increased by Rs3/litre (~33%). price by Rs2/litre (~5%) and has proposed to deregulate diese pricel in the future.
However, no timeline for the decontrol has been mentioned. In the cooking fuel segment,
domestic LPG price has been increased by Rs35/cylinder (~11%), and kerosene price
has been increased by Rs3/litre (~33%).
Prices of petrol and diesel were last increased in February 2010, while prices of LPG
and kerosene were previously revised in January 2009 and April 2002, respectively.
Post the price hikes, retail selling prices of petrol, diesel, LPG and kerosene in Mumbai
will increase to Rs55.4/litre, Rs41.6/litre, Rs347/cylinder and Rs12/litre, respectively.
Exhibit 1: Revised vs. old prices of subsidised petro products
Particulars Old prices New prices Inc. in prices Hike
(Rs/litre, Rs/cyl) (Rs/litre, Rs/cyl) (Rs/litre, Rs/cyl) (USD/bbl)
Petrol 51.7 55.4 Rs ~3.7 12.8
Diesel 39.6 41.6 Rs ~2.0 6.8
Kerosene 9.0 12.0 Rs 3.0 10.3
Domestic LPG 312.0 347.0 Rs ~35 4.6
Source: Government of India, Angel Research
The announcement of petrol deregulation While the announcement of petrol deregulation is in line with our expectation, the
is in line with our expectation, the announcement of the deregulation of diesel and increased prices of kerosene and
announcement of the deregulation of domestic LPG have surprised us positively. However, absence of (1) the timeline of the
diesel and increased prices of kerosene diesel price deregulation, (2) the frequency of change in petrol price and (3) pricing
and domestic LPG have surprised us limit (band) for petrol price takes some sheen off the decision.
positively
We were also pinning hopes on the announcement of the subsidy-sharing formulae;
however, the absence of the same has left us a bit disappointed, as it makes it difficult
to judge the beneficiaries of the move. Although the current reforms are positive in
nature, they in themselves are not adequate and need to be followed by the deregulation
of diesel prices coupled with announcement of the subsidy-sharing mechanism.
June 28, 2010 2
3. Oil Price Deregulation | Event Update
EGoM decision in sink with Kirit Parekh Committee's recommendation
Relative to the recommendation of the Kirit Parikh committee, decisions taken by the
EGoM seem to be inadequate as the increase in kerosene and domestic LPG prices is
less than that proposed by the Kirit Parekh Committee. The deregulation of diesel
prices in a phased manner is contrary to the complete deregulation recommended by
the committee. We believe the government has marginally increased prices, considering
the possible political fallout in case the prices were increased significantly.
However, we believe government has done enough on the recommendations of Kirit
Parekh Committee. Moreover, if the recommendation of the Kirit Parikh committee
would have been accepted in totality, under recoveries would have come down
drastically. Significantly lower under recoveries along with cash subsidy of Rs20,000cr
to be provided by the government would have resulted in a reduction subsidy-sharing
burden for ONGC, OIL and GAIL to the levels of around Rs1,600cr-2,000cr. Thus, we
were not anticipating any increase in the retail prices of kerosene and domestic LPG.
Exhibit 2: Oil reforms-Key proposals of Kirit Parekh Committee, EGoM's decision and Impact analysis
Proposal Parekh
Kirit Parekh Committee EGoM decision Impact analysisfu
Pricing of petrol Prices of petrol should be deregulated Petrol prices deregulated Positive for marketing
operations of OMCs, upstream
segment and private retailers
Pricing of diesel Prices of diesel should be deregulated Diesel prices hiked by Positive for marketing
Rs2/litre with a promise to operations of OMCs, upstream
deregulate the same in segment and private retailers
future
Pricing of kerosene Prices of the kerosene to be increased by Kerosene prices hiked by Lower-than-recommended
Rs6/litre, subsidy on kerosene to be Rs3/litre, UID project to price hike for kerosene;
restricted to BPL families and delivered address the deliverability however, better-than-market
through smart cards/UID project in the issue expectations
future
Pricing of Domestic Prices of the domestic LPG to be increased Prices of the domestic LPG Lower-than-recommended
LPG by Rs100/cylinder increased by Rs35/cylinder price hike for domestic LPG
Subsidy on LPG and Cap on subsidy on domestic LPG and No mention of the same Absence of the subsidy-sharing
kerosene kerosene of Rs20,000cr to be borne by formulae
the government
Source: Kirit Parekh committee report, Angel Research
Impact of the EGoM decision on under recoveries
After incorporating the EGoM's decision, under recoveries in the sector are expected
to reduce by around 29% to Rs54,516cr for FY2011E from the earlier estimate of
Rs77,213cr.
June 28, 2010 3
4. Oil Price Deregulation | Event Update
Exhibit 3: Change in under recoveries on account of EGoM's decision for FY2011E
Particulars Pre price revision (Rs cr) Post price revision (Rs cr) % change
HSD 27,602 16,465 (40)
MS 6,923 1,731 (75)
Total auto fuels 34,525 18,196 (47)
LPG 20,772 18,125 (13)
Kerosene 21,917 18,196 (17)
Total cooking fuels 42,688 36,320 (15)
Total under recoveries 77,213 54,516 (29)
Source: Angel Research
The government's move to increase petro products' prices will also affect under
recoveries in FY2012E. However, the amount of under recoveries in FY2012E is likely
to be contingent on the deregulation of diesel prices or otherwise; this would lead to
two scenarios:
If diesel prices are deregulated by FY2012E: The government has not provided the
FY2012E:
roadmap of the deregulation of diesel prices. However, we believe the same is contingent
on headline inflation numbers going ahead. Given the expectation of moderation in
inflation numbers, we foresee decontrol of diesel prices by the end of FY2011E.
Exhibit 4: Under recoveries for FY2012E (in case of diesel prices are deregulated)
Particulars (Rs cr) FY2012E
HSD -
MS -
Total auto fuels -
LPG 20,738
Kerosene 22,151
Total cooking fuels 42,890
Total under recoveries 42,890
Source: Angel Research
Government continues to control diesel prices: If the government is unable to increase
diesel prices going ahead, under recovery in diesel will continue to exist. Thus, in
addition to a subsidy on cooking fuels, there will be a subsidy on diesel as well. This
will result in overall under recoveries of Rs55,118cr (in line with the subsidies expected
in FY2011E).
Exhibit 5: Under recoveries for FY2012E (in case of diesel prices are not deregulated)
Particulars (Rs cr) FY2012E
HSD 12,228
MS -
Total auto fuels 12,228
LPG 20,738
Kerosene 22,151
Total cooking fuels 42,890
Total under recoveries 55,118
Source: Angel Research
June 28, 2010 4
5. Oil Price Deregulation | Event Update
However, given the likely softening of inflation going ahead, we believe the government
will deregulate diesel prices. This will reduce under recoveries to manageable levels.
In our view, the government will share 50% of the total under recoveries under the
scenario, while upstream companies will be asked to share the remaining (50%).
Thus, downstream companies will not be required to share the subsidy burden going
ahead. Our estimates are factoring similar subsidy-sharing mechanism in the picture,
which in turn results in ONGC reporting net realisations of around US$58-60/bbls
and EPS of around Rs120-125/share.
Key issues to watch out in the near future
Time for deregulation of diesel: While the EGoM has deregulated petrol prices, we
believe the key event to watch out for going ahead will be the timeframe to deregulate
diesel prices. Under recoveries on petrol are less than 10% of the overall under
recoveries, the same on diesel are higher at 20% (on account of higher sales volume).
Thus, the timeframe regarding the deregulation of diesel must be known for better
clarity.
Exhibit 6: Subsidy burden over the years
Particulars (Rs cr) FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Brent prices(US$/bbl) 29 42 58 64 82 85 85
Subsidies on PDS kerosene 3800 9,480 14,384 17,883 19,102 28,200 17,364
% of total 40.9 47.1 36.0 36.2 24.8 27.2 37.7
Domestic LPG 5500 8,362 10,246 10,701 15,523 17,800 14,257
% of total 59.1 41.5 25.6 21.7 20.1 17.2 31.0
Cooking fuel 9,300 17,842 24,630 28,584 34,625 46,000 31,621
% of total 100 89 62 58 45 44 69
Diesel - 2,154 12,647 18,776 35,166 52,300 9,279
% of total 10.7 31.6 38.0 45.6 50.5 20.1
Motor Spirit - 150 2,723 2,027 7,332 5,200 5,151
% of total 0.7 6.8 4.1 9.5 5.0 11.2
Transport fuel - 2,304 15,370 20,803 42,498 57,500 14,430
% of total - 11 38 42 55 56 31
Total under recoveries 9,300 20,146 40,000 49,387 77,123 103,500 46,051
Source: PPAC, Angel Research
Subsidy- sharing mechanism going ahead: We believe that possible deregulation will
Subsidy-
certainly have some effect on the position of under recoveries going ahead. However,
the possible beneficiary of price deregulation still needs to be ascertained. The likely
beneficiaries will be determined on the basis of the subsidy-sharing structure between
the various stakeholders, viz. the government (via cash subsidy), upstream companies
(discount on crude and products sold) and OMCs. However, the subsidy-sharing
arrangement is based on the paying capacity of the companies involved, which is
further contingent on the overall subsidy level and level of crude oil prices.
June 28, 2010 5
6. Oil Price Deregulation | Event Update
Exhibit 7: Ad-hoc subsidy-sharing mechanism
Particulars (Rs cr) FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Oil bonds - - 11,500 24,100 35,300 71,292 26,000
% of total subsidy - - 28.8 48.8 45.8 68.9 56.5
Upstream companies 3,200 5,900 16,700 20,700 25,700 32,208 14,430
% of total subsidy 34.4 29.3 41.8 41.9 33.3 31.1 31.3
Borne by OMCs 6,100 14,246 11,800 4,587 16,123 - 5,621
% of total subsidy 65.6 70.7 29.5 9.3 20.9 - 12.2
Total under recoveries 9,300 20,146 40,000 49,387 77,123 103,500 46,051
Source: Company, Angel Research
The absence of definite free pricing bands Historically, the subsidy burden-sharing trend seems to be missing with the subsidy
acts as an overhang. However, we believe between various parties shared in an ad-hoc manner (based on the paying capacity
the move is unlikely to pose a major of the various parties involved). For instance, the share of OMCs has fluctuated between
concern for OMCs given our subdued 0-71%. Thus, there exists the risk of proportion of subsidy burden sharing in favour of
outlook on crude oil prices going ahead the government at the expense of oil PSUs, which could lead to downside in stock
price of companies uder consideration.
Definitive price band for petrol: The absence of definite free pricing bands acts as an
overhang over the deregulation process. We expect government to provide further
details over the free pricing mechanism of petrol. However, we believe the move is
unlikely to pose a major concern for OMCs given our subdued outlook on crude oil
prices going ahead.
Deregulation of retail prices - On a firm footing
In FY2002, the government gave limited This is not the first attempt by the government to deregulate petroleum product prices.
freedom to the OMCs to revise retail prices In April 2002, in an attempt to phase out subsidy on petroleum products, the
within a band of +/-10% of the mean of government dismantled the administered pricing mechanism (APM), paving the way
rolling average of the last 12 month's and for free pricing mechanism for petrol and diesel, while prices of kerosene and LPG
the last 3 month's international C&F prices were still kept under the regulator's purview. At that time, the government gave limited
freedom to OMCs to revise retail prices within a band of +/-10% of the mean of
rolling average of the last 12 month's and the last 3 month's international C&F prices.
In case of breach of the band, the matter had to be taken up with the Ministry of
Finance for modulation in excise duty rates. Oil companies were given some freedom
to determine the prices based on the international petroleum market. However, the
euphoria of dismantling was short-lived. When crude prices started to increase in
2004 and oil companies wanted to pass on the same, the government's interference
halted the free pricing of petrol and diesel in June 2004. Thus, the past record of
implementation of the pricing reforms has not been very impressive.
In such a scenario, the key concern that is likely to emerge is how long the current
deregulation work. Leaving apart political compulsions, we see a strong possibility of
market-based pricing of petrol and diesel likely to evolve going ahead. The key
arguments in favour of the same are:
June 28, 2010 6
7. Oil Price Deregulation | Event Update
We expect crude oil prices to average Subdued outlook on crude prices: We expect crude oil prices to be range-bounded in
US$75/bbls in FY2011E and FY2012E the near future, on account of relatively subdued demand outlook in OECD countries,
along with growth in production of NGL by OPEC countries. On account of the same,
we expect crude oil prices to average US$75/bbls in FY2011E and FY2012E.
Considering the same, the required changes in the price of petrol and diesel will not
be significant. Though there is no mention of the pricing band as was the case in
erstwhile dismantling of APM, we believe the government is likely to provide pricing
freedom to OMCs until US$90/bbls (thus providing a tentative pricing freedom of
15% from the current crude levels).
Headroom for further reforms: Even if crude oil prices were to register a significant
increase, we believe the government has certain levers in the form of reduction in
excise and custom duty to address the situation of under recoveries. Moreover, the
recent statement by the petroleum minister also seems to suggest that the government
will also discuss the issue of the high state tax on petroleum products. Any favourable
development on the issue could widen the headroom available for further corrective
measures in the event of spiraling increases in crude oil prices. Also a clear policy of
subsidy in high oil price environment would be positive.
Impact of deregulation on OMCs
We believe downstream oil companies (HPCL, BPCL and IOC) are likely to be key
beneficiaries of the deregulation on the following counts:
Reduction in overall subsidies to manageable limits: On account of the EGoM's
recommendation regarding the deregulation of petrol price coupled with the
proposed deregulation of diesel price and increase in kerosene and domestic LPG
prices, the overall subsidies are likely to subside to manageable limits.
Subdued outlook on crude oil prices
Improved profitability situation of upstream companies post the APM gas price
hike, enables them to bear a relatively higher subsidy burden
Government efforts towards divestment in IOC
HPCL, on an average, has traded at 1.15 times P/B in the last five years. We expect
further re-rating of the P/B multiple going forward, contingent of deregulation of the
diesel prices. At the expected book value of Rs405/share in FY2012E and assigning a
P/B multiple of 1.15x, we have arrived at a fair value of Rs465 for HPCL. Thus, at the
CMP the stock provides an upside of 7.4%. We do not have rating HPCL at the current
,
juncture.
We expect BPCL to report EPS of Rs60.4 in FY2012E . At the expected book value of
Rs481.2/share in FY2012E and assigning a P/B multiple of 1.3x, we have arrived at a
core business value of Rs625/share and ascribing Rs75/share to the E&P business of
the company, we arrive at a fair value of Rs700/share for BPCL. Thus, at the CMP the,
stock provides an upside of 9%. We believe in this case the risk-reward ratio is skewed
in favour of the return. We do not have rating on BPCL at the current juncture.
June 28, 2010 7
9. Oil Price Deregulation | Event Update
Impact of Auto fuel deregulation on ONGC
We expect ONGC to report net realisation In case of upstream companies, we were already building in proposed moves, the
of around US$60/bbls (in FY2011E and same was reflected in higher-than-consensus EPS estimates for ONGC. We expect
FY2012E) as the large part of the benefit ONGC to report net realisation of around US$60/bbls (in FY2011E and FY2012E) as
on account of reduction in under the large part of the benefit on account of reduction in under recoveries is retained by
recoveries is retained by the government the government and OMCs. However, in case of ONGC, on the back of reduction in
and OMCs overall under recoveries, the risk associated with variability in earnings estimates of
ONGC has reduced to an extent. Therefore, we increase our target multiple for the
company from 10x to 11x. At FY2012E EPS of Rs123.3/share, we arrive at a target
price of 1356/share for ONGC, resulting in an upside of 3.9% from current levels.
We recommend Neutral rating on ONGC.
Exhibit 10: Key Financials - ONGC
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 104,588 101,760 117,551 124,021
% chg 8.1 (2.7) 15.5 5.5
Profits
Net Profits 19,795 19,404 24,505 26,372
% chg (0.4) (2.0) 26.3 7.6
OPM (%) 41.3 43.7 44.9 46.1
EPS (Rs) 92.5 90.7 114.6 123.3
P/E (x) 14.1 14.4 11.4 10.6
P/BV (x) 3.0 2.7 2.4 2.1
RoE (%) 23.4 20.0 22.2 20.8
RoCE (%) 24.5 19.4 23.3 23.3
EV/Sales (x) 2.5 2.5 2.1 2.0
EV/EBITDA (x) 6.1 5.8 4.7 4.3
Source: Company, Angel Research
Impact of auto fuel deregulation on GAIL
The Kirit Parikh committee has We were also pinning hopes on the announcement of the subsidy-sharing formulae;
recommended that there should not be however, the absence of the same has left us a bit disappointed, as it makes it difficult
any subsidy burden on GAIL. The move if to judge the beneficiaries of the move. The key decision regarding whether GAIL
accepted would be significantly positive should be asked to share the subsidy burden or not is also not taken. The Kirit Parikh
for GAIL committee has recommended that there should not be any subsidy burden on GAIL.
The committee perceived GAIL to be a distribution company rather than an upstream
company. Currently, we continue to build subsidy sharing by GAIL in our estimates.
However, the Kirit Parikh committee recommendation if accepted would be significantly
positive for GAIL. We maintain our estimates and recommend a Buy on GAIL with a
target price of Rs580.
June 28, 2010 9
10. Oil Price Deregulation | Event Update
Exhibit 11: Key Financials - GAIL
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 23,776 24,996 36,672 40,840
% chg 32.0 5.1 46.7 11.4
Net Profits
Profits 2,804 3,140 3,843 4,466
% chg 7.8 12.0 22.4 16.2
OPM (%) 17.1 18.7 15.9 17.6
EPS (Rs) 22.1 24.8 30.3 35.2
P/E (x) 21.4 19.1 15.6 13.4
P/BV (x) 4.1 3.5 3.1 2.6
RoE (%) 20.2 19.8 21.0 20.9
RoCE (%) 21.3 22.1 21.8 22.4
EV/Sales (x) 2.4 2.2 1.7 1.5
EV/EBITDA (x) 14.2 11.7 10.6 8.3
Source: Company, Angel Research
Private marketers likely to benefit from the deregulation
Reliance Industries (RIL) and Essar (EOL), We believe the deregulation of auto fuels is likely to result in the re-entry of private
which had closed down its retail players into auto fuel dispensing. Reliance Industries (RIL) and Essar Oil (EOL), which
operations on the back of lack of level had closed down their retail operations due to lack of a level-playing field, are likely
playing field, are likely to benefit on to benefit from the deregulation. EOL has already started to ramp up its entire retail
account of the proposed de-regulation outlet network, with most of it having started and rest about to start. RIL has also
started opening its retail outlets, and the company would get more aggressive if the
government policy regarding the complete deregulation of diesel prices gets clearer.
We believe that BPCL due to its RIL, in particular, could ramp up its retail operations at a much faster pace, as in the
overlapping presence with RIL in the past the company was able to ramp up its share in the diesel segment to 14% in three
highway segment is likely to be most to four years. Given that the company has its retail outlets in place, regaining the lost
affected on account of increased market share would not take more than two to three quarters. We have not built in the
competition due to de-regulation of the potential impact of the entry of private players in auto fuel dispensing. Thus, there
auto fuel prices exists a threat of lower sales of petrol and diesel for public sector OMCs. We believe
BPCL, due to its overlapping presence with RIL in the highway segment, is likely to be
the most affected on account of increased competition due to the deregulation. The
committee has also recommended that private marketers should be provided with a
subsidy for under recoveries on the sale of cooking fuel. This step, if implemented,
would be positive for RIL and EOL. We maintain a Buy on RIL with a target price of
Rs1,260.
June 28, 2010 10
21. Oil Price Deregulation
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Disclosure of Interest Statement GAIL ONGC
1. Analyst ownership of the stock No No
2. Angel and its Group companies ownership of the stock No Yes
3. Angel and its Group companies' Directors ownership of the stock No No
4. Broking relationship with company covered No No
Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to -15%) Sell (< -15%)
22. Oil Price Deregulation
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